Delhi High Court
Oriental Insurance Company Ltd vs Shefali Goel & Ors. on 11 May, 2012
Author: G.P. Mittal
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 1st May, 2012
Pronounced on: 11th May, 2012
+ MAC APP. 260/2004
ORIENTAL INSURANCE COMPANY LTD ..... Appellant
Through: Mr. Joy Basu, Advocate
Versus
SHEFALI GOEL & ORS. ..... Respondents
Through: Mr. O.P. Mannie, Advocate for the
Respondents No.1 to 7
WITH
+ MAC APP. 476/2012
SHEFALI GOEL & ORS. ..... Appellants
Through: Mr. O.P. Mannie, Advocate
Versus
ORIENTAL INSURANCE COMPANY LTD ..... Respondent
Through: Mr. Joy Basu, Advocate
CORAM:
HON'BLE MR. JUSTICE G.P.MITTAL
JUDGMENT
G. P. MITTAL, J.
1. These are two Appeals (MAC APP. No.260/2004 and MAC
APP. No.476/2012) arise out of a judgment dated 20.02.2004
passed by the Motor Accident Claims Tribunal (the Claims
Tribunal) whereby a compensation of `45,64,320/- along with
interest @ 7% per annum was awarded for the death of Raj
Narain Goel, who died in an accident which occurred on
13.08.2000.
2. MAC APP No.260/2004 filed by the Oriental Insurance
Company Ltd. is for reduction of compensation and Cross-
Objections registered as MAC APP. No.476/2012 filed by the
Respondents No.1 to 7 is for enhancement of compensation.
3. The only ground of challenge raised on behalf of the Insurance
Company during the course of the hearing is that the deduction
towards Income Tax was not made by the Claims Tribunal
before computing the loss of dependency. Reference is made to
the judgment of Sarla Verma & Ors. v. Delhi Transport
Corporation & Anr., (2009) 6 SCC 121.
4. On the other hand, it is urged on behalf of the Respondents
No.1 to 7 that there were as many as seven dependents. Since
the number of dependents were seven, 1/5th deduction should
have been made towards the personal and living expenses.
Reliance is placed on a recent report of the Supreme Court in
Santosh Devi v. National Insurance Company & Ors, Civil
Appeal No.3723/2012 decided on 23.04.2012. It is stated that
the compensation of `5,000/- awarded towards loss of
consortium is very meager. A compensation of `1,00,000/-
ought to have been awarded under this head. The award of
interest @ 7% is also stated to be very low.
5. The learned counsel for the Respondents No.1 to 7 relies on
Sarla Dixit v. Balwant Yadav, (1996) 3 SCC 179 in support of
his plea that the Income Tax is not to be deducted from the
income, whereas the learned counsel for the Appellant
Insurance Company presses into service the report of the
Supreme Court in Sarla Verma (Supra) in support of his
contention that the Income Tax is required to be deducted for
the computation of loss of dependency.
6. Sarla Dixit(supra) relates to the death of a person who was
working as a Captain in the Army and was getting a salary of
`1500/- per month in the year 1975. The dependents were his
widow and a minor daughter. It was in these circumstances i.e.
his income was very meager though taxable and the dependents
were a widow and a minor child that the Supreme Court held
that deduction of 1/3rd may be made towards the personal
expenses and the liability towards payment of Income Tax etc.
It was not laid down as a general principle of law that the
liability towards Income Tax is not be to be taken into
consideration or that it would be covered in 1/3rd deduction. In
Sarla Verma(supra), it was laid down that the Income Tax has
to be deducted for computation of the compensation. Para 20 of
the report is extracted hereunder:
"20. Generally the actual income of the deceased
less income tax should be the starting point for
calculating the compensation. The question is
whether actual income at the time of death should
be taken as the income or whether any addition
should be made by taking note of future
prospects."
Therefore, in my view, the Claims Tribunal erred in not
deducting Income Tax from the income of the deceased.
7. As far as deduction towards the personal and living expenses is
concerned, reliance on Santosh Devi (supra) is misplaced.
There are two type of expenses for the deceased. Firstly, the
personal expenses which may also be called out of pocket
expenses. These are the expenses incurred by an employee or a
self employed person incidental to the employment i.e. the
expenses towards tea, snacks and for reaching the place of
employment; this would also include expenses towards the
pleasure. The other would be the living expenses or in other
words the expenses for sustenance i.e. on food, clothing etc. etc.
The expenses on food and clothing would be equal for the other
members of the family and a person having a very low income
may not spend anything towards his pleasure or entertainment.
He may spend a very minimal amount on tea, snacks etc. during
the course of employment. In para 15 of the report in Santosh
Devi(supra), the Supreme Court referred to the personal
expenses which were confined to the expenses incidental to
employment and for pleasure etc. The rest of the money which
is spent on the living expenses i.e. towards food and clothing is
normally spent equally for all the members of the family
dependent on the deceased.
8. In this case, the number of dependents including the father were
seven. Shefali Goel, the First Respondent testified about the
number of the dependents and stated that there is no other legal
heir. The deceased Raj Narain was 44 years old on the date of
the accident and at the time his father must be 65 to 70 years
old. I would, therefore, consider him to be dependent on the
deceased. Since the number of dependents were seven, there
would be deduction of 1/5th on account of the personal and
living expenses of the deceased.
9. The Claims Tribunal awarded a compensation of `5,000/-
towards loss of consortium. Usually, a conventional sum of
`5,000/- to 10,000/- is awarded towards the head of loss of
consortium (per Sarla Verma (supra)). Since this accident took
place in the year 2000, in the circumstances, I would not
interfere with the discretion of the Claims Tribunal in awarding
a compensation of `5,000/- under this head.
10. Thus, in view of the above discussion, the loss of dependency
comes to `34,10,565/- (`26199 X 12 = 3,14,388 -
80145(Income Tax) + 30% X 4/5 X 14). On adding a sum of
`30,000/- towards love and affection (as granted by the Claims
Tribunal towards pain and suffering), ` 10,000/- towards funeral
expenses and `5,000/- each towards loss of consortium and loss
to estate, the total compensation comes to ` 34,60,565/-.
11. It is urged that the interest awarded @ 7% was very low. This
accident took place in the year 2000; the Claim Petition was
instituted in February, 2001 and was decided in the year 2004.
During all this time, the inflation and the rate of interest were
very low. The award of interest @ 7% was just and reasonable.
It does not call for any interference.
12. The overall compensation thus stands reduced from
`45,64,320/- to ` 34,60,565/-.
13. The excess amount of `11,03,755/- along with proportionate
interest shall be recoverable from the Respondents No.1 to 7 in
the proportion of the award made by the Claims Tribunal. They
shall be liable to pay interest @ 7% per annum from the date
they received the payment till it is deposited with the Claims
Tribunal. If they make the deposit of the amount within a
period of three months from the date of the order i.e. before
11.08.2012, they shall not be liable to pay any interest from the
date they received the payment upto the time of redeposit with
the Claims Tribunal.
14. Both the Appeals are disposed of in above terms.
(G.P. MITTAL)
JUDGE
MAY 11, 2012
pst
